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Gambling that India’s disastrous second COVID surge has passed, investors have poured cash into the country’s stock market, lifting the Nifty 50 Index of India’s 50 biggest public companies 9 percent from its low six weeks ago.

The rupee has gained 4 percent against the dollar during the same time.

Investors apparently see little to hobble India’s economic recovery among its top corporations.

The country is still logging more than 100,000 new COVID infections each day, according to the Financial Times, but that number is well below May’s typical rate of more than 400,000 a day.

Also, infection rates are falling in the capital, New Delhi, and Mumbai, the country’s business and financial center.

Profits for the economy’s top echelon of companies were at an eight-year high as 2020 ended, Edelweiss Financial Services reported.

Although the country’s economy sharply contracted over the past 12 months and “the pie may have shrunk… the allocation of profitability has shifted very sharply to top-end businesses,” Aditya Narain, Edelweiss’s research director, said to the FT

Foreign investment has recently begun to return, analyst Vikash Jain at brokerage CLSR told the FT.

First-quarter earnings have not yet been reported, he noted, which will reflect economic damage done by the virus’s most recent outbreak. 

Any resulting downturn in markets should be brief, he added, although the latest virus surge could leave consumers with “a bit of a reality check,” making them slow to resume spending.

There will be a “one- or two-month impact, then earnings growth is going to bounce back sharply,” Hemang Jani, a strategist at Motilal Oswal Financial Services, said in an FT interview.


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